Company claims banks refuse to release HK$5m in chain's revenue

Yoga Planet has closed, leaving its 13,000 clients holding memberships not worth the paper they're printed on. A little over a month ago the company was selling discounted memberships to 1,500 clients left high and dry when Yoga Yoga International underwent its own exit from the material world.

A statement on Planet Yoga's Facebook page blamed banks for leaving the company insolvent and unable to continue operations. "The club, with deepest regret, announces that revenue collected through our banks since September 2009, which today is in excess of HK$5,000,000, is being withheld by those banks - in our view, arbitrarily and inappropriately - forcing us to close our studios after seven years of sound and efficient operation," Planet Yoga said in the post.

"For the past several months, investors have funded the shortfall created by the banks' devastating actions while the club tried to work out a solution with the banks. Despite our exhaustive efforts to persuade the banks to release these funds, we recently were informed that there is no timetable for the release of our funds," the statement read.

Members also received cellphone text messages that classes are closed and that details are available at Planet Yoga's Facebook account.

Notices from a provisional liquidator were put up at all three branches of Planet Yoga in Tsim Sha Tsui, Central and Causeway Bay, saying the yoga school was closed because of cash flow problems.

Members can collect their belongings from lockers from May 22-24. A creditors' meeting, to which club members will be invited, will be held at 2 pm on May 31 at the first floor Auditorium of Duke of Windsor Building at 15 Hennessy Road. The enquiry number is 2232-7312.

Not unexpectedly angry members are accusing the club of creating a lot of bad karma, for the way it campaigned for new memberships with new promotions and giveaways.

A woman who identified herself as Mrs Yeung said she had signed a HK$60,000 contract for two years of private lessons two months ago. She said all she got for her money was three lessons. She said she even asked the sales representative about the possibility of Planet Yoga's closing. The representative replied the company had just signed new two-year leases.

A Planet Yoga instructor who identified himself as Kaplin said the company paid teachers in full last month and that everything appeared normal.

"No sign whatsoever. All of sudden," he said. "It's surprising, shocking. I still can't believe it's closed."

The Labour Department is offering help to affected employees through a hotline 2922-6222. Secretary for Labour and Welfare Matthew Cheung Kin-chung said 20 of some 90 employees of Planet Yoga have registered.

Claiming to be the "most complete Yoga center in Hong Kong", Planet Yoga was set up in 2003 with fitness industry veteran Torey Lee as one of the co-founders.

It's no secret that the yoga business is plagued with vicious competition and declining public interest. Industry insiders have estimated patronage at yoga centers has declined by one third from its peak three years ago and that many yoga centers are relying on prepaid packages to maintain cash flow.

Connie Lau, Chief Executive of the Consumer Council, said the council had received 199 complaints about yoga centers as of Thursday this year. That surpasses the number for all of 2009. Almost half the complaints are from people who signed up for prepaid packages but failed to receive service.

People on prepaid packages are considered unsecured creditors in liquidation and chances for them to get compensation are low, she said.

Consumers may be able to cut their losses if they paid through their credit cards on a monthly-installment plan, she said.

"We suggest the members issue a letter to the credit card issuer as soon as possible to seek assistance in recovering the fee," she said.

Police said five complaints about Planet Yoga had been received as of Friday afternoon.

China Daily

(HK Edition 05/15/2010 page1)